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How MoneyOnMobile plans to scale its India payments business


Around four years after Calpian invested $29 million in MoneyOnMobile, it is going all in: Calpian has sold off its credit card processing business. Now with only an India payments business to focus on, Calpian is changing its name to Money On Mobile, Inc. The timeline is interesting: Calpian was launched in 2011 to buy credit card processing assets, invested in MoneyOnMobile in 2012, and by 2016, the credit card business has been sold off, and it’s all MoneyOnMobile.

Claiming to have served 173 million Indian mobile phone users till date, Calpian says that MoneyOnMobile “has grown to be India’s largest mobile money system”. This, it says, is what led to its board to sell their US operations in the payment processing business on November 30, 2015. “Calpian, Inc. is now a pure play company with only one focus: the growth of MoneyOnMobile”, it’s Chairman and CEO Harold Montgomery said on its earnings conference call, following the announcement of its FY16 results.

MoneyOnMobile’s primary business is money transfer within India, but like other offline digital wallet players, including Oxigen, the money is also used for purchasing tickets and paying bills: Consumers deposit cash with one of its agents at a retail location, and it gets deposited into a wallet. Then an agent can use that money to pay bills or transfer the money to a designated user elsewhere, using only the mobile phone and SMS text messages.


MediaNama readers should note that it’s unlikely that Calpian served that many “users”, because India is a multi-SIM card environment, and the number that really matters is not the number of account holders, but the number of daily and monthly active users. So the number to refer to is 7-8 million customers per month, as per MoM’s own filing.

MoneyOnMobile has added Jim McKelvey, a Founder and currently a Director of Square, to join its Board.

Data on MoneyOnMobile

– Number of users (mobile numbers) ever serviced: 173 million
– Serving 7-8 million customers each month for FY16. So that’s a maximum of 96 million customers in FY16.
– 6.4 million customers in June 2016
– March 2016 end: 310,676 agents (Retail stores) where consumers can load cash. June 2016: 319,292 agents (Retail stores), up by 2637 from May 2016. (source)
– 128 million transactions in FY16
– $754 million transactions in FY16.
– $67.6M in transactions in June 2016
– Average amount transacted per transaction for FY16: $5.89 (around Rs 400)
– Total average daily money transfer in Kolkata: Rs 200,000 (around $3,000 USD)
– In May 2016, it said that 65% of the transactions took place via feature phones. (source)


MoneyOnMobile’s plans for scale

“Success in our business depends on scale”, Montgomery said on the call, and compared MoneyOnMobile with a Russian company called QIWI, which is profitable, “has grown net income at a double-digit rate for four of the last five
years”, and currently has a market capitalization of about $730 million.” Montgomery believes that the Indian market allows MoneyOnMobile to bring in up to $8 billion in annual net fee revenue for financial transactions. He also pointed out that India is a market with low cost of customer acquisition, low cost of processing for small value payments “quite typical in India”, and “we can and do process payments of just a few rupees quite profitably.” This is because the company operates on a revenue-sharing model with stores and agents, which, frankly, is not new to India. So, it needs scale, for which it has the following plans:

  • Plans to scale across India, targeting 1 million locations: MoneyOnMobile, which isn’t profitable, said last quarter that it expects to be profitable once it reaches 1 million locations, which is what it is targeting: a shop within a quarter of a mile of 80% of the Indian population. Money on Mobile currently covers all states in India, “with an emphasis in the eastern states, and now we need to penetrate deeper.” It plans to “both broad throughout the country and deeper into metropolitan areas with high traffic zones, which have proved very beneficial for us in the past. We’ve been experimenting with branded locations with good results and are looking to increase the scope of this program in the future.”
  • Adding more agents via partnerships: They’ve partnered with a Kolkata based NGO called the Kalighat Society, which has approximately 75,000 female agents in India who will be signing up with MoneyOnMobile over the next few months. These agents are involved in providing financial education for women in underserved areas of Bihar, Jharkhand, and Bengal, and are now being trained to operate MoneyOnMobile. “I would expect the rollout to take approximately a year. We should start to see the impact of the Kalighat Team before the end of this calendar year, but at this point, it’s impossible to predict the financial impact.” MoneyOnMobile sees this an a cost-effective way of increasing the number of agents on the network.
  • Increasing services and share of high value transactions: It plans to add more services to the system to increase frequency of use. Last quarter, it said that its team had suggested allowing the collection of insurance premium via MoneyOnMobile agents. It says “customers who use MoneyOnMobile tend to use it more as they see more services emerge and become familiar with the system”, and “Domestic remittances, for example, have been a strong growth area for us this year and are higher-margin and higher ticket value transactions for us.”

Source: MoneyOnMobile Earnings Call

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